Price may change for HD Supply

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Home Depot is in discussions with three private equity groups over the sale of its HD Supply division “in view of current financial market conditions,” the retailer announced. Changes to the terms and financing could result, including a lowering of the $10.3 billion purchase price.

The company also said it will change the terms of its share repurchase plan, lowering its tender offer from a range of $39 to $44 per share to $37 to $42. The expiration date has been extended to Aug. 31.

Home Depot first announced its $22.5 billion stock buyback and recapitalization plan in June, along with the agreement to sell its pro-oriented HD Supply division to a consortium of three investment firms, Bain Capital Partners, Carlyle Group and Clayton, Dubilier & Rice.

CEO Frank Blake said the company performed in line with financial expectations, despite a challenging housing market and competitive selling environment. In a statement, Blake expressed some pessimism on selling conditions in the coming year, but added the company is attempting to find valuable investment opportunities to drive growth in a down market.

"We believe the housing and home improvement markets will remain soft into 2008. We will continue to invest thoughtfully for the long-term health of the business," Blake said.

Earnings in the company’s HD Supply unit were lower in light of a hefty tax charge. Earnings fell 59 percent to $66 million from $161 million last year at HD Supply, including a tax charge of $60 million related to the disposition of the division. Home Depot now is listing HD Supply as a discontinued operation.